This applies to both you and your partner. If you cease to be a couple, it applies to whoever lives in the home.

Extended land use test

To meet this test you need to be using the land to make an income, if possible. This could mean:

you or a family member are running a farming business on the land

leasing the land to someone else for a commercial rate of return

having little or no scope to earn income from the land

We consider:

where the land is

your family situation, for example caring responsibilities

your health

if any of your family have their own house on the land

if the land supports you and your family or a younger generation of your family

any commercial land use

any scope for commercial land use

environmental issues, like a drought

if the land combines 2 or more blocks or titles

Examples

Example 1

Bob is single and 65. He owns 30 hectares on a single title. He’s lived there all his life and runs it as a dairy farm. As long as Bob keeps working the farm to its potential, the whole property is exempt from the assets test. Any other business assets aren’t exempt, such as stock and sheds.

Example 2

Betty and Jim moved to their 5 hectare, single title rural residential block 21 years ago. The block is scrubby, with no water. There’s not much scope to earn income from it and the council won’t let them subdivide it. This means the whole property is exempt from their assets tests.

Example 3

Jenny is 85 and has lived on her 100 hectare single title farm for the past 40 years. She can’t run the farm on her own any more. Her son John and his family live in another house on the land. John earns his living from running the farm. The whole property is exempt from Jenny’s assets test.

If you don’t pass the test

The normal rules about private land use will apply. This means your assets test won’t include:

your home

up to 2 hectares of land on the same title - this can’t be land you use for a business

Your assets test will include the rest of the land.

Primary production businesses

This is where you get income directly from:

farming crops or animals

fishing or forestry

making dairy products

If you’re in this kind of business we:

add up all your assets you use to keep it going, like land, equipment and stock

add up all your liabilities that relate to it, like debts and wages

count them as 1 asset and 1 liability

If you have excess debt on one primary production asset, we can use it to reduce the assessed value of another.

If you use an asset for something else as well as primary production, it’s still a business asset if that’s its main use. If there is a liability over the asset, we can deduct a share of the liability.

Forgone wages

Farmers often transfer ownership of the farm to a family member when they retire.

If you do this and don’t get a fair price in return, it may be a gift. This means the value of the farm land and other assets will still count in your assets test.

You can reduce this value if the person you transfer the farm to:

is your close relative

has made unpaid contributions to the farm that count as forgone wages

What counts as forgone wages

Forgone wages only cover contributions:

in the form of:

unpaid farm work

unpaid care for the farmer

improvements to the farm

by the farmer’s close relatives aged 15 or older

We can’t include any time you spent share farming or in a partnership as a forgone wage contribution period.

Unpaid work

This includes:

farm record and account keeping

farm hand work

other tasks that the farm would have had to pay an outside worker to do

Unpaid care

This is a high level of personal care for at least 12 months, including:

cooking and feeding

dressing and undressing

showering and toileting

Normal housework and chores don’t count as unpaid care.

Improvements

These include:

building new fences, dams and sheds

planting vines and trees that produce a crop

buying livestock and equipment

They don’t include:

higher market value over time

repairs

planting trees that don’t crop, such as windbreaks

proposed capital expenditure

Claiming forgone wages

You can do this if you transfer the farming land to a close relative. This can be:

directly to your close relative

from you to their trust

from your trust or company to theirs

from your trust or company to them

Forgone wages only apply to the transfer of the farming land, plant, stock and equipment. If you transfer other assets and you don’t get a fair value, gifting rules apply.

What you need to prove

You need to prove to us that:

you’ve transferred ownership or control of the trust or company that owns the farm to a close relative